By:

M. Nomanul Haq
Roll No: 888

TRADE, COMMERCE AND

INTERCOURSE

INTRODUCTION

Part XIII of the Constitution deals with

the trade, commerce and intercourse
within the territory of India.
Trade, commerce and intercourse can
be domestic and international in
nature.
It is given under Articles 301-307 of
the Indian Constitution

CONTD.

Trade: Buying or selling of goods

Commerce: All forms of transportation

of those goods.

Intercourse: Movement of goods from

one place to another

ARTICLE 301

Art. 301- Subject to the other provisions of this part,

trade, commerce and intercourse throughout the
territory of India shall be free.

Scope and object:

1. It imposes a limitation upon the exercise of
legislative power, whether by the Union or by a state.
2. The object of freedom declared by this
article is to ensure that the eco. unity of India may
not be broken up by the internal barriers.

ATIABARI TEA COMPANY V. STATE OF ASSAM

The company carried out the business of growing tea and

then exporting it to Calcutta via Assam.
Besides the tea carried by rail, a large quantity of tea was
carried by road and inland waterways from Assam to
Bengal.
Assam Govt. passed the Assam Taxation Act, 1954 and
levied taxes on certain goods carried by road or inland
waterways in the State of Assam.
The Act was regarded as infringing the guarantee of
freedom of trade, commerce or intercourse guaranteed
under Art. 301 because the Bill moved in the Assembly had
not received the assent of the President as required under
Art. 304 (b) proviso.

CONTD.
The Court held that the tax imposed by the State of
Assam was directly restricting the transport or
movement of goods in an unreasonable manner, hence
the motive behind the legislation was found to be faulty.
Gajendragadkar J., explained the kind of restriction from
which freedom is given under Art. 301 as:
1. Restrictions in the sense those which are directly and
immediately restricting or impeding the free
flow/movement of trade.
2. Indirect and remote restrictions are possible for
application like traffic regulation, licensing of vehicles,
prescribing min. wages of the employees, etc.

AUTOMOBILE TRANSPORT LTD.

V.
STATE OF RAJASTHAN

By virtue of Sec. 4 of the Rajasthan Motor

Vehicle Taxation Act, 1951, no one could use
or keep for use a motor vehicle in Rajasthan
without paying an appropriate tax for it and
anyone failing to comply with the provisions
of the Act shall be made liable to penalties
imposed under Sec. 11 of the Act.
The SC held the tax to be compensatory in
nature and hence it did not violate Art. 301.

CONTD.
The SC accepted the Direct and Immediate Test with
some clarifications in it which are as follows:
1. A measure which operates on trade, commerce or
intercourse indirectly and remotely is not violative of Art.
301.
2. A measure which operates on trade, commerce or
intercourse directly and immediately is violative of Art. 301.
3. A measure which operates on trade, commerce or
intercourse directly and immediately may not be violative
of Art. 301 if it is:
a) A Regulatory measure, or
b) A Compensatory measure

LIMITATIONS IMPOSED ON FREEDOM GUARANTEED

UNDER ART. 301

Art. 302 Restrictions may be imposed by

the Parliament in public interest
Art. 302 is subject to the condition in Art. 303
that such Union law should not be
discriminatory as between different States
except where it is necessary for dealing with
the situation of scarcity of goods.
If the condition of public interest is satisfied,
Art. 302 would authorize both inter-State or
intra-State restrictions.

CONTD.

Art. 303 (1) Neither Parliament nor the State

Legislature shall have power to make any law giving or
authorizing the giving of any preference to one State
over another or making or authorizing the making of
any discrimination between one state and another.
If goods produced in another State are taxed while
similar goods produced in the taxing State are
exempted, it will amount to discrimination.
Art. 303 (2) Discriminatory/preferential provisions
may be made by the Parliament for the purpose of
dealing with the scarcity of goods arising in any part of
India.

CONTD.

Art. 304 (a) Non-discriminatory taxes may be imposed by a State on goods coming
from other state if same goods produced within that state are subjected to same taxes.
Art. 304 (b) Reasonable restrictions may be imposed by States in public interest
Freedom guaranteed under Art. 301 is subordinated to the State power of taxing goods
imported from sister States provided that no discrimination is made in favour of similar
goods of local origin.
It applies not only on the taxes which are levied at the point of entry into the State but
also to all taxes on goods, including sales tax.
It is not an exception to Art. 301 but a restatement of a facet to the very freedom
guaranteed by Art. 301.
Art. 305 The law which was made before the commencement of the constitution shall
not be affected by the provisions of Art. 301 except by the order of the President. Any
law passed by the Union thereby creating the State monopoly shall not be affected by
the provisions of Part XIII of the Indian Constitution.
Art. 306 Repealed by the 7th Amendment in 1956.
Art. 307 Parliament may appoint such authority as it considers appropriate for carrying
out the purposes of Articles 301 to 304 and confer such powers and duties on such
authority as it thinks necessary.